Final answer:
A cost accounting system includes the task of allocating costs to specific products, which helps in the accurate calculation of product costs and supports effective pricing and expense management strategies.
Step-by-step explanation:
A cost accounting system primarily focuses on tracking and managing costs within an organization. Among the options provided, a cost accounting system includes allocating costs to specific products.
This is essential for understanding the actual cost of manufacturing a product or providing a service, which in turn aids in setting the appropriate sales price, managing expenses, and generating profit.
Cost accounting does not typically involve preparing cash flow statements, budgeting for personal expenses, or auditing financial statements as these are broader financial activities.
An effective cost system ensures that all the costs related to production—including direct costs like raw materials and labor and indirect costs like overhead—are accurately captured and assigned to each product.
This allows for a more precise measurement of gross domestic product and its components, assessment of the flow of funds, and a deeper insight into business cycles and activities.